The ‘supply chain’ patient is sick: is there a cure for the Pharma Supply Chain? (part 2)

Well, is there a treatment option? Yes, I would say there is, and the regulators certainly think so too, having been pressing the industry for nearly 10 years to adopt more modern processes by which to develop, manufacture and supply drugs. Dr Janet Woodcock of FDA, in launching the FDA’s modernization initiative in 2002, challenged the industry to create a significantly more efficient and high quality supply chain without extensive regulatory oversight.

In concert with the FDA, the International Conference on Harmonization (ICH – Japan / EU / US) laid out guidelines (ICH Q8-10) outlining a preferred approach based on research into a range of other sectors (e.g. semiconductor, aerospace, automotive) that were successfully translating product concepts into marketed products with high quality supply chains. A decade later, regulatory oversight is as strong, if not stronger, than ever and quality concerns have never been greater.

“The industry has either missed the point completely or has not been able to translate the guidelines into concrete improvement actions.”

The industry has either missed the point completely or has not been able to translate the guidelines into concrete improvement actions. Whichever is the case, very little seems to have changed in supply chain performance measures. Why is this so? Because the reigning industry paradigm, as characterized by the gambling metaphor, is resisting the kind of radical change necessary to make an impact. To describe it in the spirit of the metaphor, the industry does not want to go out and get a proper job. In real life terms, that would mean running the business in the same way every other sector has to, by creating superior customer value propositions and delivering on them, and when you have never done it before, where do you start?

Well, the starting point for curing any addiction is for the addict to admit there is a problem and then take the rehab. Having made that initial giant leap, what is the treatment required?

The treatment regimen

To understand more fully the treatment, it is helpful to step back to the point at which the regulators issued the modernization message. If I read the literature correctly, they discovered that sectors focused on end customer value, designed their products and supply chains from a very early stage, with manufacture in mind and sought to continuously improve quality, cost and delivery performance.

To achieve this, however, those sectors had to radically re-think their organizational structures and attitude towards customers, suppliers, productivity levels and, of course, quality. They recognized that R&amp,D ‘throwing proposals over the wall’ for others to manufacture, was a major problem for quality. To counter this, they involved all relevant parties at the design stage. This included, for example, marketing, manufacturing, procurement and key suppliers. The focus of attention was on relentlessly meeting customer expectations for value as delivered by the end-to-end supply chain.

They also redefined roles and responsibilities with respect to ‘quality’. Edwards Deming proved in the 1950s that if operators were given simple statistical tools that they understood and applied for themselves, they could vastly improve the defect levels from their work.

“Edwards Deming proved in the 1950s that if operators were given simple statistical tools that they understood and applied for themselves, they could vastly improve the defect levels from their work.”

The quality inspection functions were redirected away from rote testing into more value adding areas such as quality engineering, where they worked on the integrity of the quality system. These improved quality systems were directed at reducing opportunities for error across the value stream. They recognized that that complex, ill-defined systems work strongly against the best efforts of committed employees, and perfected the systems.

Will Pharma take the medicine?

So that is just a flavour of what, in my opinion, needs to happen. Currently, the industry is taking the wrong medicine, by further outsourcing of critical assets, building layers of Quality oversight that disguise the underlying issues and increasingly looking towards SME’s to do the leg work in the vital early stages of development where the foundations of a supply chain are formed. Maybe it is time for a new prescription?

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About the author:

Hedley Rees is author of “Supply Chain Management in the Drug Industry: Delivering Patient Value for Pharmaceuticals and Biologics” (J. Wiley 2011) and is a practising consultant, coach and trainer. He helps healthcare companies build, manage and continuously improve their clinical trial and commercial supply chains and risk profiles. He has his own company, Biotech PharmaFlow Ltd, based in the UK and handles assignments across the spectrum from top ten Pharma’s through to highly virtual early stage start ups. Prior to this, Hedley held senior supply chain positions at Bayer, British Biotech, Vernalis, Johnson &amp, Johnson and OSI Pharmaceuticals. His skill set covers the range of supply chain management processes from strategic procurement, production and inventory control, distribution logistics, information systems and improvement. His specific interest is in driving industry improvements through the regulatory modernization frameworks of FDAs 21st Century Modernization and ICH Q8 – Q11.

Hedley holds an Executive MBA from Cranfield University School of Management and is a corporate member of the Chartered Institute of Purchasing and Supply (MCIPS). He is a member of the UK BioIndustry Association’s (BIA) Manufacturing Advisory Committee and also regularly speaks at international conferences, being co-chair of the FDA/Xavier University sponsored Global Outsourcing Conference held in Cincinnati in October each year. He is also widely published in US and EU pharmaceutical journals.